Ergen trumps SoftBank with $25bn Sprint bid

New York, London
Charlie Ergen
, chairman of
Dish Network
, launched his boldest bid on Monday with a $25.5 billion offer for
Sprint Nextel
that trumped an agreed deal for the US ­wireless carrier by Japan’s SoftBank.

The enigmatic billionaire is jockeying for position as the US wireless industry undergoes a tumultuous round of consolidation that will position a new batch of winners and losers in the world’s most valuable telecommunications market.

The unsolicited cash and stock bid, which would marry the second-ranked satellite television operator with the third-largest US mobile phone provider, is the latest offer to signal a budding revival of high stakes mergers and acquisitions.

The bid from Dish caught Sprint and SoftBank by surprise, with neither company initially making any comment.

SoftBank has so-called matching rights that could set off a bidding war for Sprint. It is entitled to a $600 million break fee if its deal falls through. The Japanese group’s current offer, which is being reviewed on national security concerns, is expected to close by July 1.

Buying Sprint would allow Mr Ergen to use the valuable cache of wireless spectrum he has amassed, and position him as a true rival to Verizon Wireless and AT&T, the US’s two largest mobile phone operators. A combined Dish and Sprint could also offer a “triple play" of integrated phone, internet and video services, allowing it to compete with cable operators.

“Dish Sprint is the only company that could do that," Mr Ergen said. “That is the vision. We’re going to give consumers what they want."

Mr Ergen has considered making offers for Deutsche Telekom’s T-Mobile USA unit and MetroPCS in recent months. He has also launched a counter-offer for Clearwire, a spectrum-rich company that Sprint is trying to buy. “We talked to everybody in the industry," Mr Ergen said. “That’s no secret."

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But he only targeted Sprint after securing regulatory approval to use a portion of his spectrum for wireless services. “It is a Rubik’s cube in terms of how you solve problems," a person who is working on the deals said. “You have to test the waters and see what works."

Dish said its bid was superior to SoftBank’s $20.1 billion deal for 70 per cent of Sprint.

Joining Dish with Sprint would offer $37 billion in synergies and growth opportunities, including an estimated $11 billion in cost savings, Dish said, whereas synergies from Japanese and US wireless providers joining forces are minimal.

Mr Ergen’s bid faces hurdles. SoftBank has already provided $3.1 billion in financing to Sprint, which is convertible to 16 per cent of Sprint stock. Dish is offering $7 per share for Sprint in cash and stock, a 13 per cent premium over the SoftBank offer. Sprint shareholders would own 32 per cent of the combined company, compared with 30 per cent in the SoftBank deal.